The Commission confirmed that a probe into the spending of both groups was underway “to consider whether there have been any breaches of the rules which set out how campaigners should report spending incurred as part of a joint campaign”.

Labour Leave registered the payment to UKIP under the category “rallies and other events”.

A spokesman from Labour Leave, which was bankrolled by Labour donor John Mills and supported by some pro-Brexit Labour MPs, told PoliticsHome that the case was being watched by the Commission for “some time”

The spokesman said that the group have “provided the information and documentation they asked for”.

“We have followed the advice and helped and cooperated with them every step of the way,” he added.

Labour MEP Seb Dance, who raised the issue with the Commission, said Brexit supporters within the party should condemn Ukip, rather than work alongside them.

"Labour Leave has consistently stated this payment was made in accordance with advice from the Electoral Commission, yet the Electoral Commission has now decided this donation requires further investigation,” he said.

“Whatever the outcome, I believe everyone in the Labour party should condemn UKIP’s values, not condone them.

“No Labour party member should campaign with Ukip, and they certainly should never donate to them.”

A UKIP spokesperson said: “We have already responded to the Electoral Commission's enquiry.

“We did do some joint activity with Labour Leave which included a ‘donation’ from them to Ukip to cover part of the cost.”

The Commission has the power to impose fines of up to £20,000 if it concludes a party or group has breached the rules.